Dec. 18, 2014, 2:04 PM
- With the help of stronger-than-expected hardware sales, Oracle (ORCL +9.2%) beat FQ2 estimates in spite of a 400 bps forex headwind (twice what was originally expected). FQ3 guidance was conservative after taking forex pressures into account.
- The numbers have been good enough for Oracle to surge to new highs and receive a slew of target hikes, and to lead many enterprise tech names to outperform amid a big market rally. The Nasdaq is up 1.9%.
- Microsoft (MSFT +3.2%), Cisco (CSCO +2.3%), EMC (EMC +3.7%), VMware (VMW +5.1%), and beaten-down IBM (IBM +2.8%) are among the enterprise tech names outperforming today. Others: SPLK +4.6%. CA +3.5%. RHT +3.4%. VRNS +6.3%. PCTY +5.8%. JIVE +4.6%. VMEM +5.2%. SAAS +4.7%. BRCD +3.8%.
- Oracle's healthy cloud software numbers are drawing attention: While traditional software license revenue fell 4% Y/Y, its SaaS/PaaS revenue rose 41%. SaaS/PaaS bookings totaled $170M, and are expected to be "well over" $1B in FY16 (ends May '16). Fusion cloud app bookings rose over 100%.
- On the CC (transcript), Oracle performed its customary trash-talking of cloud app rivals. "We are clearly growing faster than Salesforce (CRM +4%) and were more than three times the size of Workday (WDAY +3.2%)." Both firms are posting solid gains.
- Oracle's numbers come as Bloomberg reports the Chinese government is looking to "purge most foreign technology from banks, the military, state-owned enterprises and key government agencies by 2020." IBM, Cisco, and other U.S. firms have already seen their Chinese sales fall sharply following last year's NSA spying uproar.
Dec. 18, 2014, 7:24 AM
Dec. 12, 2014, 2:28 AM
- Cisco (NASDAQ:CSCO) is planning a big jump into big data as it searches for more sources of revenue growth amid a slowdown in sales.
- Differentiating itself from the many companies that compete in data-analysis technology, Cisco plans to offer software that runs not only on servers in corporate or commercial data centers but on it’s own networking equipment.
Dec. 10, 2014, 5:13 PM
- Neohapsis provides security advisory services to Fortune 500 companies in fields including risk management, compliance, cloud services, and mobile. Cisco's (NASDAQ:CSCO) acquisition price is undisclosed.
- Neohapsis will be added to Cisco's security services unit. formed a year ago with the goals of better supporting Cisco's security hardware and offering new managed services. Many peers have also been adding to their security service lineups, as enterprises increasingly look for integrated hardware/software/services solutions to deal with security threats.
- Cisco, looking to keep pace with smaller, faster-growing rivals such as Palo Alto Networks and Fortinet, bought malware-protection software firm ThreatGRID in May, and launched a managed threat defense service a month before that. Last year, it struck a $2.7B deal to buy intrusion prevention system (IPS) vendor SoureFire.
Dec. 9, 2014, 12:12 PM
- "For the first time, our checks are starting to consistently find that Cisco (CSCO +0.1%) is gaining mind-share as the player to beat in the SDN market," says Wedbush, launching coverage with an Outperform rating and $31.50 target. "While Cisco's solution is reportedly far from ideal, it offers enough differentiation to create a gravity of its own."
- Cisco has seen decent early uptake from its enterprise installed base for its ACI/APIC SDN/networking virtualization solution, which it argues delivers better network and app visibility than cheaper rival solutions from VMware (VMW -1.5%) and backers of the OpenDaylight SDN initiative. VMware claimed 250+ paying customers for its NSX SDN platform at the end of Q3; Cisco claimed 900+ Nexus 9000 (data center switch) and ACI customers at the end of its October quarter.
- Wedbush also forecasts Cisco's switching growth will accelerate in 2015, benefiting from a pickup in industry growth to 7% from 2014's 2.5% (per Dell'Oro). "While we conservatively model 5.5% y/y growth for Cisco's switching line in 2015, we expect a combination of share gains in the data center market, rising E-Rate funding, and campus switching upgrades could propel switching performance toward parity with the overall market."
- Wedbush's target is respectively equal to 11.2x and 9.1x the firm's calendar 2015 EPS and free cash flow estimates.
- Previous: Cisco, Juniper in the crosshairs as Verizon tests bare-metal hardware
Dec. 5, 2014, 11:06 AM
- Cisco (CSCO -0.3%) alleges Arista's (ANET -0.8%) data center switches contain "12 discrete and important Cisco features covered by 14 different U.S. patents."
- Arista, founded by ex-Cisco employees, is also accused of lifting Cisco's copyrighted materials wholesale. "Entire sections of our copyrighted user manuals, complete with grammatical errors, are included in Arista’s documentation. In addition, Arista lifted over 500 of our multi-word command line expressions identically and directly from our “IOS” into Arista’s “EOS”, comprising almost half of their entire command line interface."
- Though Cisco's data center switch sales remain relatively healthy - the company still has a 60%+ share, and has been seeing solid demand for its Nexus line - Arista's switches (differentiated by their low latencies and high densities, as well as their OS) have become a major competitive threat. Arista is expected by the Street to see its revenue rise 33% next year to $765M.
- Cisco's Mark Chandler: "In the thirteen years I’ve been General Counsel of Cisco, I can count on one hand the number of times we’ve initiated suit against a competitor, supplier or customer." Huawei would be one notable example.
Dec. 4, 2014, 7:04 PM
- With a corporate upgrade cycle and Web/cloud demand boosting sales, IDC estimates global server revenue rose 4.8% Y/Y in Q3 to $12.7B, an improvement from Q2's 2.5% growth and Q1's 2.2% decline. Gartner is more conservative, estimating revenue only rose 1.7%.
- "IDC has seen increasing market influence from Greater China, hyperscale datacenters, ODMs and native Chinese OEMs, all of which grew sharply in the third quarter," says VP Matt Eastwood. Like others, IDC expects Intel's recent Grantley Xeon CPU launch, together with the pending end of Windows Server 2003 support, to keep demand healthy.
- Thanks to weak demand for its high-end, Itanium-based, Integrity servers, market leader H-P's (NYSE:HPQ) share fell 140 bps Y/Y to 26.5%, after having risen 40 bps in Q2. H-P just rolled out Integrity servers running (x86-based) Intel Xeon CPUs in an attempt to stop the bleeding.
- #2 IBM's share fell 500 bps to 18.2%, thanks to both high-end (mainframe/Power) and x86 weakness. The sale of IBM's x86 server unit to Lenovo closed early in Q4. #3 Dell's share rose 80 bps to 17.8%.
- Cisco (NASDAQ:CSCO) passed Oracle (NYSE:ORCL) to take the #4 slot: Cisco's share rose 130 bps to 6.2% on the back of 31% revenue growth, while Oracle's was flat at 4.1% (3.4% revenue growth). Today, Cisco and IBM announced a converged hardware solution that pairs the former's UCS servers with the latter's Storwize storage arrays.
- As expected, white-label servers sold to Internet giants (called ODM Direct by IDC) continued gaining ground: Their share rose 250 bps to 8.9%. Everyone else saw their share collectively rise 210 bps to 18.4%.
- Related tickers: SMCI, MLNX, QLGC, ELX
Dec. 1, 2014, 6:47 PM
- During a talk with Chris Dedicoat, the president of Cisco's (NASDAQ:CSCO) EMEA ops, UBS' Amitabh Passi sensed "increasing confidence and momentum in switching (Nexus 9k, 10g-40g), software-defined networking (ACI), data center, mobility, and edge routing (ASR 9k)."
- Passi has hiked his target by $2.50 to $30.50, and predicts Cisco will narrow its valuation gap relative to large-cap tech peers such as Microsoft and Intel. He admits Russia and Asia remain "challenging" regions for the company, but doesn't expect them to get any worse.
- Cisco's Asia-Pac orders fell 12% Y/Y in FQ1, thanks in part to a 33% drop in Chinese orders. The Nexus 9000 line, which plays a key role in Cisco's ACI/APIC SDN and networking virtualization platform, was an area of strength, with paid customers rising to 900+ from 580 at the end of FQ4.
- Strong ASR 9000 demand is a positive for network processor supplier EZchip (NASDAQ:EZCH). The edge router line saw double-digit order growth in FQ1, even as broader carrier router demand continued falling.
Nov. 22, 2014, 3:37 PM
- The Rayno Report states Verizon (NYSE:VZ) has launched a major trial of bare-metal (commodity) switches running on a networking OS and SDN switching software respectively supplied by startups Cumulus Networks and Pica8.
- Light Reading backs up the report, while adding Verizon "aims to determine whether bare-metal switches ... could eventually replace more expensive, proprietary Juniper Networks Inc. (NYSE:JNPR) equipment." Nonetheless, Rayno reports Juniper is a part of the trial, supplying "routing and switching technology that helps tie the network together with VXLAN [networking virtualization] technology."
- Though the trial is in its early stages, both sites report hearing it's a big deal, given the potential for bare-metal/white-box gear to replace proprietary hardware on a large scale. "[Verizon] can reduce their costs massively," says a Rayno source. The trial coincides with the deployment by Verizon's cloud services ops of an SDN solution using server-based hardware from Super Micro (NASDAQ:SMCI).
- Cisco (NASDAQ:CSCO), which maintains a 60%+ data center switch share and a leading position in the carrier router market, has already called white-box hardware its biggest threat. Internet giants have been quick to embrace SDN/white-box solutions - Facebook has even open-sourced a data center switch design - and AT&T is looking to adopt SDN through its Domain 2.0 initiative.
- Cisco's recently-launched ACI/APIC SDN/networking virtualization solution is gaining traction within the company's enterprise base, but critics call it too expensive/proprietary - pricing for an APIC controller runs from $40K-$58K, and software licenses for ACI-capable switches run from $3K-$15K. Meanwhile, Verizon, AT&T, and other carriers are hungry to cut wireline capex.
- Juniper has adopted an SDN strategy that's more friendly to open platforms, but there might be some internal dissent on that front. Rayno reports recently-ousted CEO Shaygan Kheradpir "was more pro-SDN than the existing Juniper management, which is more conservative about protecting its installed base."
Nov. 18, 2014, 2:53 PM
- Looking to halt ongoing collaboration revenue declines - sales fell 10% Y/Y last quarter to $871M - Cisco (CSCO +0.7%) has launched a new high-end telepresence system (the IX5000) for conference rooms, as well as a new VoIP/videoconferencing terminal for mid-sized firms (the BE6000S).
- The networking giant has also unveiled Project Squared, a Web/mobile platform that leverages existing collaboration products (WebEx, telepresence, unified communications, etc.) to create an online workspace for users to communicate and share messages/files.
- Cisco claims the IX5000, which features three 70" screens and 4K cameras, requires half the bandwidth of rival three-screen telepresence systems. A partnership has been formed with cloud storage/file-sharing startup BOX to integrate the company's services with Project Squared.
- Both Cisco's telepresence and unified communications sales have been under pressure amid tough competition from the likes of Polycom (PLCM +0.5%) and Microsoft, as well as various startups. On the FQ1 CC (transcript), John Chambers noted Cisco wants to shift more of its collaboration revenue to comprehensive enterprise license agreements/subscriptions.
Nov. 13, 2014, 11:36 AM
- "In the context of the considerable headwinds Cisco (NASDAQ:CSCO) currently faces, the results this quarter were quite solid," writes BMO (Outperform) following Cisco's FQ1 report. With soft carrier (orders -10% Y/Y) and emerging markets (BRIC/Mexico orders -12%) demand already telegraphed by Cisco and peers, investors are giving the company a pass for its light FQ2 guidance.
- RBC (Outperform): "Strong GM improvements and the rebound in switching point to encouraging trends for Cisco, which is also squeezing out added workforce productivity." Atlantic Equities (Overweight): "At 11x PE 2015E and 8x EV/FCF, Cisco’s valuation appears undemanding among other large cap tech stocks, especially given its 7% earnings CAGR 2014-17E."
- Bears remain worried about sales growth and the long-term impact of SDN. Citi (Sell): "We continue to believe Cisco remains a flat to low-single-digit grower with little upside to op margin. We therefore believe the current 12x P/E more than compensates for the 3% dividend, yet slowing buyback.”
- JPMorgan (Underweight): "We continue to believe current switching industry ASPs and margins are unsustainable due to structural technology shifts." For its part, Cisco disclosed its ACI/APIC SDN/networking virtualization solution saw its paid customer count more than double in its first full quarter of shipments. VMware is seeing growing demand for its rival NSX platform.
- FQ1 product performance: Switching +3% Y/Y to $3.85B (strong data center switch sales); routing -4% to $1.95B (carrier weakness); collaboration -10% to $949M (telepresence weakness); service provider video -12% to $871M (set-top weakness); data center +15% to $693M (server share gains); wireless +11% to $605M (strong Meraki sales); security +25% to $455M (boosted by the SourceFire acquisition).
- Prior Cisco earnings coverage
Nov. 12, 2014, 4:50 PM
- Cisco (NASDAQ:CSCO) guides on its FQ1 CC (webcast) for 4%-7% Y/Y FQ2 revenue growth and EPS of $0.50-$0.52. That's below a consensus for 8.4% revenue growth and EPS of $0.53.
- John Chambers states the forecast reflects an "added measure of conservativeness" regarding weak U.S. carrier spending. Cisco traded lower on Monday after AT&T forecast its capex would fall by $3B in 2015.
- Cisco's total product orders rose 1% Y/Y in FQ1, even with FQ4's clip. Americas +2%, EMEA +6%, Asia-Pac/Japan -12%.
- U.S. orders rose 3% Y/Y thanks to public sector (+22%) and SMB (+7%) strength, but U.S. service provider orders fell 18%.
- CSCO -0.6% AH. FQ1 results, details.
Nov. 12, 2014, 4:18 PM
- Along with its FQ1 results, Cisco (NASDAQ:CSCO) announces CFO Frank Calderoni is leaving at the end of 2014. Business technology/operations finance SVP Kelly A. Kramer will replace him.
- FQ1 gross margin was 63.3%, +150 bps Q/Q and +30 bps Y/Y, and above guidance of 61%-62%.
- Product revenue rose fractionally Y/Y to $9.44B, after declining 2% in FQ4. Services revenue (driven by past sales, more stable) rose 5% to $2.8B, an even growth rate with FQ4.
- GAAP opex rose 1% Y/Y to $4.99B. $1B was spent on buybacks; $1.5B had been spent in FQ4.
- FQ1 results, PR
Nov. 12, 2014, 4:06 PM
Nov. 11, 2014, 5:35 PM
Nov. 10, 2014, 9:51 AM
- Declaring its Project VIP network expansion effort ahead of schedule, AT&T has set a 2015 capex budget of $18B, down from 2014's $21B and below a prior forecast of $20B. The figure is equal to only 13% of AT&T's 2015 revenue consensus.
- Telecom equipment and optical component makers, many of whom have already felt the effects of AT&T's subdued 2014 wireline capex, are off in early trading. CSCO -1.4%. ALU -4.8%. CIEN -6.6%. ADTN -7.8%. JNPR -2.5%. RKUS -2.1%. SONS -2.9%. FNSR -2.9%. JDSU -1.1%. RKUS -2.1%. XXIA -2%. FFIV -1.6%. ERIC -1.7%.
- Cisco delivers its FQ1 report on Wednesday. The networking giant reported an 11% Y/Y FQ4 drop in service provider orders, thanks to both weak demand and share loss.
CSCO vs. ETF Alternatives
Cisco Systems Inc is engaged in designing, manufacturing and selling of Internet Protocol (IP) based networking products and services related to the communications and information technology (IT) industry.
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